SYDNEY: Australian shares rose 0.5 percent in morning trade, rising for the fifth straight session despite markets in Europe and the US failing to hold onto the previous day's big gains.
"The market is doing very well, because it's holding the gains from yesterday," said Chris Kimber, Managing Director Fat Prophets.
"There's definitely been a reasonable change in sentiment, because over the last few months there's been a sell of straight away after rallies like that," he added
Australia's banks helped drive gains, with Westpac and Commonwealth Bank of Australia both up almost 1 percent, despite Standard & Poor's Ratings Services cutting the ratings on five Australian banks on Thursday as a result of major changes in the criteria it uses to assess risk.
Australia and New Zealand Banking Group Ltd, Commonwealth Bank of Australia, National Australia Bank Ltd and Westpac were each cut one notch to AA minus, the fourth-highest credit rating on S&P's scale.
US payrolls data is due later on Friday and traders fear markets could face a sell-off should the jobs report fall short of hopes.
The benchmark S&P/ASX 200 index was up 23.6 points at 4,252.3 as of 0137 GMT and is on track to finish the week over 6 pct higher.
A Reuters poll forecast Sydney's benchmark share index will recover in 2012, provided the uncertainty in the European debt crisis eases, driven by a solid economy, a softer Aussie dollar, and ongoing demand from China for Australian resources.
Australia's benchmark S&P/ASX 200 index has fallen almost 11 percent so far in 2011, which would be the second-worst year in two decades, as investors have reacted to constant headlines on the euro zone crisis, keeping analysts cautious on the near-term despite low valuations.
New Zealand's benchmark NZX 50 index slipped 0.1 percent to 3,273.6 points.
STOCKS ON THE MOVE
Rio Tinto shares fell 0.2 percent to A$65.76, after the company announced it would invest an additional $2.7 billion to modernise its Kitimat aluminium smelter in Canada's British Columbia.
Shares is retailer David Jones slipped 0.4 percent to A$2.87. The retailer held its AGM on Friday and CEO Paul Zahara said challenging retail conditions lay ahead for the Christmas period.
Fosters shares slipped 0.2 percent to A$5.38 as the Supreme court of Victoria approved its scheme of arrangement with SABMiller PLC.
Shares is Australia's Centro Retail were trading 5 percent higher at A$0.320 after the company said on Friday a court gave final approval to the group's proposed restructure, after the deal was delayed by former auditor Pricewaterhouse Coopers.
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